AgriVisor Afternoon MarketWatch

Thursday, April 27, 2017
***** Corn futures up 2 1/2 to 3 cents; soybeans finish fractionally firmer; Chicago wheat higher by 4 3/4 to 5 3/4. *****

   # Weather was the major driver for today’s grain gains.  A big rain event for the Midwest this weekend will disrupt planting efforts.  Localized flooding could trigger some replant needs.  The two-week maps still lean cool and wet for the Eastern Corn Belt.  
   # Still hanging over the corn market is talk that NAFTA will be dismantled in a way that causes U.S. exporters to lose their top customer in Mexico.  Rumors were swirling yesterday about an executive order that would start the withdrawal process immediately, but White House officials stepped in to say that the U.S. would sit down at the bargaining table first.  
   # Export sales were mostly strong on the week.  Corn sales of 988,000 tons were more than anticipated.  2017/18 corn sales of 72,000 tons missed the mark, but traders won’t worry much about next year’s book just yet.  New soybean sales were 808,000 tons.  Many analysts suspect that the USDA’s soybean export target can come up before the marketing year ends. 
   # A cold snap for the Southern Plains worries hard red wheat growers in the region.  Parts of Kansas had a handful of hours last with temperatures below freezing.  Call these weather worries the reason for Kansas City wheat futures being the leader of the grains today.
   # Soyoil futures backed off a touch after contracts ran into pushback from the technical seller.  Also negative for the product was a lower finish for Asian palm oil markets.  Still broadly supportive are expectations for the biodiesel tax credit to be extended and applied only to U.S. blenders.
   # U.S. jobless claims rose last week by more than anticipated to 245,000.  Durable goods orders increased by less than expected.  Stocks indices were trying to recover early losses but struggled to buck pressure from weaker energy shares.  Data on 1st quarter GDP will help guide equities tomorrow.
   # Oil markets sagged as traders priced in worries about demand, seeing yesterday that gasoline and diesel inventories were rising.  There are also some renewed concerns about OPEC potentially failing to reach an agreement to extend production cuts into the second half of the year.      

***** Cattle futures may benefit from follow-through buying at the start, but those contracts are reaching back into overbought territory on the charts; hogs look to open steady/stronger. *****

   # Funds are not ready to quit buying cattle futures, encouraged by both strong charts and positive fundamentals.  On the fundamental side, another strong showing for the cash trade leaves it up to the board to make good on convergence.  Demand is bullish with the domestic consumer snatching up choice beef while the export market also stays hot.   
   # Like for the grains, hogs were helped out by the White House’s dismissal of rumors that the U.S. was ready to withdraw from NAFTA immediately.  Mexico has taken up to a third of U.S. pork exports in recent years.  Also supportive are ideas that cash prices will start to strengthen in a seasonal manner.